Answer and Explanation:
The calculation of the residual income for each division is given below:
<u>Target Income Cameras & Camcorders Phones & Comm Computers & Acc.
</u>
Average Assets $20,600,000 $21,500,000 $16,600,000
Target Return 14% 14% 14%
Target Income $2,884,000 $3,010,000 $2,324,000
<u>Residual Income Cameras & Camcorders Phones & Comm Computers & Acc.</u>
Net Income $6,800,000 $3,010,000 $1,100,000
Less: Target Income $2,884,000 $3,010,000 $2,324,000
Residual Income $3,916,000 $0 -$1,224,000
